South Africa: Currency in trouble. What about stocks?
South Africa is facing severe economic headwinds as commodities demand wanes. This is clearly expressed by the growing current account deficit and weakening of the Rand (the SA currency)...
Now, it makes sense for SA stocks to follow gold. But, two points here: 1) we expect gold to correct by about $300 or more to consolidate the latest run; and 2) we do not believe stocks have discounted the rising political risk in the country; which seems potentially enormous-Zimbabwe-like in scale.
Market Vitals | 08 October 2012 [http://blackswantrading.squarespace.com/storage/market-vitals/100812_mv_sa.pdf] ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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